A high-profile Carmel couple accused of tax fraud has won a dismissal of those charges and now is
going after state investigators with guns blazing.

Real estate investor Chris Marten and his wife, — a longtime Carmel jeweler — charge in a new federal lawsuit
that investigators trampled on their constitutional rights during the inquiry, which resulted in 28 criminal charges, including
tax evasion and maintaining false tax records. They’re seeking millions of dollars in damages.

Some of their concerns received a sympathetic ear from Hamilton Superior Judge William Hughes, who dismissed the criminal
case in October 2010, saying the government abused the discovery process. He expressed exasperation that prosecutors failed
to provide hundreds of documents to the other side — despite repeated orders to do so.

In his eight-page order, Hughes wrote: “The court has repeatedly and pointedly expressed its disapproval with the state’s
conduct on discovery issues in this case — and still, even after two orders compelling discovery, the state persists
in dragging its feet.”

The Martens had defended themselves in the criminal case in part by alleging the state had illegally masqueraded their criminal
prosecution as a less-threatening civil matter.

Because Hughes concluded the discovery problems alone were sufficient to justify dismissal, he didn’t try those abuse-of-process
allegations — which now are at the heart of the 11-page suit the Martens filed Feb. 15.

In his dismissal order, Hughes did note that Andrew Swain, chief counsel in the tax-litigation division of the Office of
the Indiana Attorney General, knew the Martens were targets of a criminal inquiry when he deposed them in a civil inquiry
in June 2008.

According to Hughes’ order, Swain denied during a January 2010 court hearing that he knew about the criminal investigation
when he deposed them. But the judge pointed out that, in an email three days before the deposition, Swain had written that
“the Hamilton County prosecutor is going to pursue criminal tax charges against these guys.”

In their lawsuit, the Martens said Swain had said nothing to suggest their testimony was being used in a criminal investigation.
In fact, when they asked him whether they should hire attorneys to represent them, Swain said no, according to the suit.

“The defendants deliberately used their civil powers to gain a tactical advantage in the state’s criminal prosecution,”
the lawsuit alleges. The Indiana Department of Revenue “had committed to prosecute the Martens criminally, as evidenced
by its preliminary drafting of a probable cause affidavit prior to the Martens’ deposition.”

Added Robert Garelick, an attorney with Cohen Garelick & Glazier representing the Martens: “We thought that was
potential double jeopardy and contrary to their rights. It certainly was underhanded.”

The Martens also claim that when Swain and others executed a search in July 2008, they went far beyond what was permitted
in the warrant, engaging in “an hours-long, free-for-all looting of the Martens’ home and business,” J.S.
Marten Inc., 301 E. Carmel Drive.

Defendants in the suit include the attorney general’s office, the Department of Revenue, Swain and Department of Revenue
auditor Rick Albrecht.

Bryan Corbin, a spokesman for the attorney general’s office, said in an email that “we will diligently defend
our state agency clients and employees.”

Garelick said the arrest of the Martens in June 2008 triggered a technical default on the line of credit Janice Marten used
to finance her jewelry store, which closed a short time later. (Janice Marten now operates JEM Jewellers in Clay Terrace.)

“As a direct and proximate result of the wrongful conduct of the defendants, the Martens have suffered extreme humiliation,
embarrassment and loss of reputation, have lost a multimillion-dollar business, and have lost past, present and future income
and net profits,” the lawsuit says.

Tax issues

Judge Hughes’ dismissal left unlitigated the merits of the tax charges themselves. Prosecutors had alleged the Martens
had failed to remit nearly $900,000 in retail sales taxes from 2004 through 2007. Garelick said the Martens’ position
is they’ve paid all the taxes required.

Hughes dismissed the charges with prejudice, which prevents prosecutors from refiling the case.

All of Chris and Janice Marten’s legal problems are not necessarily behind them, however. They remain defendants in
a civil securities fraud lawsuit filed three years ago by Indiana Securities Commissioner Chris Naylor.

The suit says the couple participated in a $2 million investment fraud orchestrated by Geist investment dealer Dorothy Geisler-Tragardh.
Geisler-Tragardh settled that case and reached a plea agreement in a separate criminal inquiry. She was sentenced in 2011
to one year of home detention and four years on probation.•

This column was originally published in the February 27 issue of Indianapolis Business Journal.

Conversations

0 Comments

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or
hateful.

You are legally responsible for what you post and your anonymity is not guaranteed.

Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content
are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.

No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are
relevant to the topic at hand, but please do not link to objectionable material.

We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag
a post simply because you disagree with it.